You have just taken a graduate analyst position at a specialist valuation firm and one of the directors of the firm has asked for your assistance on a valuation she is undertaking for a client. In particular, she has asked for your opinion on the equity value of a five-year project which is expected to generate the following stream of unlevered free cash flow End of year FCF 1 492 2 600 3 755 4 801 5 623 The unlevered cost of equity is 10% per annum, the cost of debt is 5% per annum and the corporate tax rate is 30%. All dollar amounts are in $ millions. Further, the project will be financed in accordance with the following target leverage ratio: End of year 5 0 60% 1 60% 2. 60% 3 40% 4 20% Lt You decide to check with several friends as to which valuation model they would recommend ... Rick suggests you use the standard WACC model Daryl suggests you use the vanilla WACC model Michonne suggests you use the FCFE model (a) What should you say to each of Rick, Daryl and Michonne ? You have just taken a graduate analyst position at a specialist valuation firm and one of the directors of the firm has asked for your assistance on a valuation she is undertaking for a client. In particular, she has asked for your opinion on the equity value of a five-year project which is expected to generate the following stream of unlevered free cash flow End of year FCF 1 492 2 600 3 755 4 801 5 623 The unlevered cost of equity is 10% per annum, the cost of debt is 5% per annum and the corporate tax rate is 30%. All dollar amounts are in $ millions. Further, the project will be financed in accordance with the following target leverage ratio: End of year 5 0 60% 1 60% 2. 60% 3 40% 4 20% Lt You decide to check with several friends as to which valuation model they would recommend ... Rick suggests you use the standard WACC model Daryl suggests you use the vanilla WACC model Michonne suggests you use the FCFE model (a) What should you say to each of Rick, Daryl and Michonne